Reserve Bank research: OCR rise to cost up to 30,000 jobs

The National Government’s
failure to contain rising house and power prices is to blame
for the coming increase in interest rates that will cost up
to 30,000 jobs, Green Party Co-leader Dr Russel Norman said
today.

Reserve Bank papers obtained by the Green Party via
the Official Information Act show that a 1% rise in the
Official Cash Rate (OCR) reduces economic output by 0.5%-1%
and increases unemployment by 0.5%-1.2% compared to the
situation if the OCR wasn’t raised. That equates to
12,500-30,000 fewer jobs in the economy than if the OCR
wasn’t increased.

The Reserve Bank is forecast to raise
the OCR by around 1% in the coming year to tackle
inflation,which is being largely driven by house and power
price rises.

“National’s failure to get house and
power prices under control is going to mean higher interest
rates and up to 30,000 fewer jobs for New Zealanders,”
said Dr Norman.

“If National had stabilised the housing
market and bought power prices down, the Reserve Bank would
not be moving to put up interest rates.

“Rising interest
rates mean less household spending, reduced business
investment, and a higher exchange rate – all of which mean
fewer jobs.

“Inflation isn’t rising because the
economy is strong. The inflation we’re seeing is due to
poor policy choices driving price rises in the non-tradable
sector.

“There are 50,000 more Kiwis unemployed than
when John Key came to power. National’s bad economic
management will make it harder for those Kiwis to get back
into work.

“The Greens have launched a suite of policies
that will stabilise the housing market and lower power
prices. These policies would make living more affordable for
families and help to keep interest rates down.

“The
Greens will focus on keeping interest rates down so that
mortgages are affordable, businesses can invest, and the
exchange rate is lower for our exporters. Our plan means are
more jobs for Kiwis. National’s inaction will cost
jobs,” said Dr Norman.

ALSO:

WorkSafe NZ has laid one charge against the Ministry of Social Development (MSD) in relation to the shooting at the MSD Ashburton office on 1 September 2014 in which two Work and Income staff were killed and another was injured. More>>

New Zealand First Leader Winston Peters has announced his intention to stand in the Northland by-election, citing his own links to the electorate and ongoing neglect of the region by central government. More>>

The Government has appointed 12 New Zealanders as members of the Flag Consideration Panel which will engage with the public about a possible new New Zealand flag, Deputy Prime Minister Bill English says. More>>

ALSO:

ALSO:

The first I knew of my mother’s charges was when I was called by a reporter yesterday. I spoke to Andrew and we agreed there is a conflict of interest at the present time which means I will temporarily stand aside from the Social Development portfolio. It’s the right thing to do… . More>>